SMALL CAP MOVERS:  Tariff victims emerge after rollercoaster week for markets

Global Stock Markets Experience Volatile Week Amid Trade Uncertainty

Global stock markets endured a rollercoaster week, initially plummeting due to concerns over escalating US trade tariffs, a potential trade war, and fears of recession, before rebounding sharply following President Trump’s decision to temporarily suspend levies. The FTSE 100 ultimately concluded the week approximately 2 percent lower. In contrast, smaller companies demonstrated greater resilience, with small-cap stocks finishing the week largely unchanged, though navigating a period of significant market volatility.

Small-Cap Performance Masks Underlying Challenges

However, the relative outperformance of the small-cap index should not be misinterpreted. The growth company benchmark remains under substantial pressure, facing challenges such as diminished investor interest, limited market liquidity, and a migration of talent towards private markets.

Year-to-date, the AIM All-Share index has decreased by 11 percent to 645 points. Zooming out reveals a more concerning trend: the index has lost over half its value since its peak in early September 2021.

Trade War Casualties Emerge

Belluscura became an early casualty of the trade disputes, experiencing a sharp 40 percent decline in its stock value.

The company, which manufactures portable oxygen concentrators designed for individuals with respiratory difficulties, withdrew its financial forecasts for the current year, citing the newly imposed US tariffs on goods from China.

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Belluscura stated that a “substantial proportion” of its oxygen concentrators, raw materials, and components are currently produced in China, a country targeted by President Trump’s tariffs, with levies reaching up to 125 percent on certain products.

Nativo Resources Plummets After Share Issuance

The week’s most significant decline was observed in mini-microcap Nativo Resources, whose stock price plummeted by 46 percent, leaving the company with a market capitalization of £322,000. This dramatic fall appears to be linked to the issuance of new shares and warrants related to the acquisition of the Morrocota Gold Mine in Peru.

Gemfields’ Rights Issue Triggers Share Price Drop

A share issue on a considerably larger scale contributed to a 20 percent decrease in the share price of Gemfields. The emerald mining and marketing firm raised approximately £23 million through a rights issue.

These funds are intended to strengthen the company’s financial position following a period of challenging trading conditions. The capital injection will also provide the necessary resources to finalize the construction of a second processing plant.

Mixed Fortunes for Audioboom and Induction Healthcare

Podcast platform Audioboom experienced a difficult week for investors, with shares falling 23 percent despite what broker Cavendish described as “robust” preliminary results and an optimistic trading update. The broker’s valuation for the stock stands at 1,300p, significantly higher than the current trading price. Chairman Michael Tobin demonstrated confidence in the company’s value by personally purchasing shares on the open market.

Conversely, research from Peel Hunt recently highlighted a trend of UK small-cap companies being targeted for acquisition by well-funded buyers, citing attractive valuations and subdued investor demand as contributing factors.

Illustrating this point, Induction Healthcare, a digital healthcare company connecting patients and doctors, agreed to be acquired by Canadian software group VitalHub for £9.7 million. Induction Healthcare’s shares subsequently surged, closing the week 58 percent higher.

Atome and Minoan Show Contrasting Recoveries

Shares in Atome witnessed a remarkable 55 percent increase after the company secured a £355 million construction contract for its flagship green fertilizer plant in Paraguay. Swiss engineering firm Casale will undertake the project, which aims to produce 260,000 tonnes of low-carbon fertilizer annually using exclusively renewable energy sources. Broker Stifel considers Atome’s shares, trading at 43p, to be undervalued, suggesting a target price of 130p.

Minoan experienced a dramatic turnaround, with shares climbing 48 percent after a previous collapse fueled by concerns regarding its financial stability. The holiday company is actively working to finalize a rescue agreement with DAGG LLP, its primary lender, to whom it owes approximately £1.2 million and has been incurring default interest of 22 percent since January.

This share price recovery may signal a positive development for Minoan. However, the stock remains down approximately 62 percent year-to-date, and trading is scheduled to be suspended on May 1 if a resolution is not reached.

Resource Companies See Gains

Cobra Resources saw a 23 percent share price increase after announcing the imminent commencement of sonic drilling at its Boland rare earth project in South Australia. This drilling program, utilizing high-frequency resonant energy, will involve up to 15 boreholes to evaluate mineralization and inform future resource estimations. The program follows a successful prior air core drilling campaign.

Directa Plus shares rose 7 percent following the announcement of €2 million in first-quarter revenue, representing a 40 percent increase compared to the previous year.

Renalytix shares edged 3 percent higher on positive trading news, revealing a 20 percent revenue growth in the third quarter. The company, specializing in AI-driven in vitro diagnostics, processed over 1,000 billable kidney tests during the quarter.

4Global Gains Attention with New Contract

Finally, 4Global, a sports analytics specialist, which was recently highlighted as a stock to watch and valued at just over one times anticipated revenues, secured a significant £500,000 contract with UK Sport. This deal is expected to pave the way for similar agreements.

For comprehensive coverage of small- and mid-cap market news, please visit www.proactiveinevstors.co.uk.

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